NIGERIAN INVESTMENT CLIMATE AND OPPORTUNITIES

1. NIGERIAN INVESTMENT CLIMATE AND OPPORTUNITIES By Engr. Mustafa Bello FNSE Executive Secretary/CEO Nigerian Investment Promotion Commission (NIPC) FOR THE ONE DAY BUSINESS AND INVESTMENT FORUM IN HONOUR OF THE VISITING BUSINESS DELEGATION FROM THE REPUBLIC OF KOREA 10TH MARCH, 2006

2. MAP OF THE WORLD

3. MAP OF AFRICA

4. MAP OF NIGERIA

5. Nigeria – Basic Facts • Country name: Federal Republic of Nigeria • Government Type: Federal Republic • Capital:Abuja • Administrative Divisions: 36 states and 1 territory • Location: Western Africa, bordering the Gulf of Guinea, between Benin and Cameroon • Geographic coordinates: 100 N, 80 E • Total Land Area:923,768sqkm • Population: 128,771,988 (July 2005 est.) • Currency - Naira (N); One USD @ N135

6. The New Economic Agenda • Good governance initiatives- Transparency and Accountability • Private Sector Empowerment • Deregulation and liberalization of the economy • Banking sector reform- Recapitalization • Commitment to Privatization and concession of public enterprises • Public Sector reform- Servicom • Anti corruption, economic & financial crime crusade - EFCC, ICPC, Security and Investment Tribunal

7. The New Economic Agenda(cont’d) • Achievement of macroeconomic stability through: • fiscal prudence and minimal deficits, • efficient resource use • Addressing the energy crises. • Liberalizing the sector by allowing private sector involvement • Unbundling of NEPA and breaking hitherto her monopoly • Rehabilitation of infrastructure at the Ports, road networks etc

8. The New Economic Agenda (cont’d) • Strengthening the Private Sector • Public-Private Partnership (PPP) • Improvement of internal security • Re-positioning the Police to tackle crime • Strengthening of facilitation process/agency • The NIPC • One-stop-shop (OSS)

9. Nigeria: Economic Potentials • Banking & Finance • Totally liberalized sector with 25 commercial banks having an average of over N25billion as capitalization fund • Foreign Direct Equity Investment of US$652million and 162,000 British Pounds • Over N406.4billion was raised from the secondary market • Opportunity of establishing a Bank (indigenous or foreign) • Opportunity of establishing Micro-finance Institution

10. Nigeria: Economic Potentials • Manufacturing • Capacity utilization of about 50% • Main strength in agro-based manufacturing activities • Opportunities to invest in wide range of industrial projects • Automobiles • one of the country’s growing sectors • currently imports completed units of automobiles for sale in the local market with more emphasis placed on after sales service • opportunities for establishing local plants abounds with • vast market potential • availability of basic raw materials (iron and steel) - Ajaokuta Steel Plant and semi-skilled labour force -

11. Nigeria: Economic Potentials • Pharmaceutical • 86 local pharmaceutical manufacturing companies • producing about 30% of Nigeria’s drug need. • 5 Indigenous manufacturers control 58 percent; • Asian-owned companies control 18 percent; • Anglo American owned companies has 14 percent; • Government companies control 5 percent, and • Others control 5 percent. • Opportunities to invest in manufacturing of drugs/medical equipment, Research and Development

12. Nigeria: Economic Potentials • Power • Electricity generating capacity of about 3,000MW • Target 10,000MW generation by 2008 • Sector totally liberalized with Power Holding Company of Nigeria fully unbundled • Private sector participation through • Build-Own-Operate (BOO) • Build-Operate-Transfer (BOT) • Build-Transfer-Operate (BTO) • Rehabilitate-Operate-Transfer • Oil & Gas • 7th world crude exporter • Proven Oil and Gas Reserves • Crude oil - 24.1 billion barrels • Gas - 120 trillion cubic feet

13. Nigeria: Economic Potentials • ICT (Telecommunication) • Fastest growing telecom industry in the world • Teledensity improved from 0.4 in 1999 to 9.2 in March 2005 • Total investment increased from US$50million in 1999 to US$7billion in March 2005 • From one major operator in 1999 to the present • 2 national carriers • 4 GSM operators • over 30 fixed telephone operators • Areas of investment opportunities are • service operators - urban and rural telephony • design & manufacture of Hardware/Software

14. Nigeria: Economic Potentials • Agriculture • 72 million hectares of arable land area with conducive vegetation all varieties of crops and ranching activities • Solid Minerals • Proven commercial deposit of Iron ore, bitumen, limestone, tantalite, gypsum, gold, coal, talc etc. • Tourism • Strategic tourist attractions both Natural and historic sites

15. Foreign Investment Regulations & Laws There are two principal laws guiding investment • Nigerian Investment Promotion Commission Act 16 of 1995 • Major Features • Liberalization of the economy - 100% ownership of investment in any sector (except ones listed in the ‘negative’ list) irrespective of nationality • Guaranteed against nationalization or expropriation by government of the federation • Guaranteed unconditional transferability/repatriation of funds through an authorized dealer, in freely convertible currency • Provision • An enterprise, in which foreign participation is permitted, shall after its incorporation with CAC, be registered with the NIPC

16. Foreign Investment Regulations & Laws (Cont’d) • Foreign Exchange (Monitoring & Miscellaneous Provisions) Act 17 of 1995 • Major Features • Foreign currency may be repatriated from Nigeria and shall not be subject to any further approval provided it is done through an authorized dealer • Any person may invest in any enterprise or security with foreign currency or capital imported into Nigeria through an authorized dealer • Any person may open, maintain and operate a domiciliary account designated in foreign currency with an authorized dealer • A person whether • Resident in or outside Nigeria • A citizen of Nigeria or not may deal in, invest in, acquire or dispose of, create or transfer any interest in securities and other money market instruments whether denominated in foreign currency in Nigeria or not.

17. Other Major Legislation Guiding Investment • The Companies and Allied Matters Act of 1990 (as amended) • Immigration Act of 1963 • The National Office of Technology Acquisition and Promotion Act of 1979 • The Investment and Security Act of 1999

18. General Incentives • Tax Holiday - Pioneer Status – 5 years for qualified activities • Enriched Capital Allowances - ranges from 50 – 90% • Corporate Tax – 30% • Withholding Tax on dividends, interest, and rent is 10%: for Royalties 15% and on management and technical agreement 10%

19. General Incentives • Profits exempted from tax • Profits derived from exports, and used to purchase raw materials, plant, equipment and spare parts in Nigeria • Profits of a company whose supplies are exclusively imported for the manufacturing of products for export • Profits/gains of a 100% export-oriented undertaking established within and outside an export free zone for the first three consecutive tax years • Export Incentives • Export Expansion Grant Fund • Duty Drawback Scheme • Export Processing Zone (EPZ)

20. Conclusion With the bias for private sector development, the Commission is more than ever equipped to ‘facilitate’ rapid growth of investment in the country by both foreign and local investors. Nigeria offers one of the most rewarding investment destination, not just in Africa but, in the World. Thank you for your attention!